Indonesia To Raise Working Capital Expenditure To Improve Infrastructure
Dow Jones, 16/08/2011
The Indonesian government plans to raise its working capital expenditure by 19.3% to IDR168.1 trillion ($19.2 billion) next year to improve infrastructure and connectivity in the archipelago.
The government plans to construct 150 kilometers of new rail network and 14 new airports, President Susilo Bambang Yudhoyono said Tuesday in a speech presenting the government's 2012 budget draft to parliament.
It also plans to refurbish 116 airports and improve the quality of over 4,000 kilometers of new and existing roads.
Poor infrastructure is often cited as a big hurdle to direct investment in the country and also increases business costs, which in turn stokes inflationary pressures.
The government has been encouraging private sector participation to help overhaul the country's dilapidated infrastructure via the so-called public- private partnership program.
Analysts estimate the government can only finance a third of its capital needs for infrastructure development.
The government Monday announced tax holidays for major direct investment in the country and is pushing to get parliamentary approval for a Land Bill, which will give more certainty on often problematic land clearance issues.
The government also plans to construct nine dams and to improve the quality of another 24 dams next year.